Cathie Wood buys $10 million of tumbling tech stock
Cathie Wood, chief of Ark Investment Management, is known for making bold moves, often buying when stocks are falling.
This week, she bought a stock that's still sliding even as markets began to recover from tariff-driven losses.
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Wood's funds saw a short-lived boost after Donald Trump won the presidency last November, but the gains didn't last.
Ark's flagship fund, the Ark Innovation ETF () , is down 11.47% year-to-date as of April 25, while the S&P 500 and the Nasdaq Composite lost 6.06% and 9.98% during the same period, respectively.
Wood's remarkable gain of 153% in 2020 won her a loyal following, but her uneven long-term performance has made others skeptical of her aggressive style.
As of April 24, Ark Innovation ETF, with $5 billion under management, has delivered an annualized three-year return of negative 1.59% and a five-year return of negative 0.70%.
In comparison, the S&P 500 index has a three-year annualized return of 10.38% and a five-year return of 15.86%.
Wood's investment strategy is straightforward: Her Ark ETFs typically buy shares in emerging high-tech companies in fields such as artificial intelligence, blockchain, biomedical technology and robotics.
Wood says these companies have the potential to reshape industries, but their volatility leads to major fluctuations in Ark funds' values.Over the 10 years ending in 2024, the Ark Innovation ETF erased $7 billion in shareholder wealth, according to a recent analysis by Morningstar's Amy Arnott. That made it the third-biggest wealth destroyer among mutual funds and ETFs in the ranking.
Wood recently raised concerns about Trump's tariffs on her "In The Know with Cathie Wood" channel.
"Things do feel a bit chaotic out there and the markets are convulsing as a result. There's a lot of uncertainty," she said.
She warned that if Trump's tariff plan isn't handled carefully, it could cause a bear market or recession, though she's hopeful that negotiations could ease tensions.
'Trump wants to be one of the greatest presidents ever... he's not going to get there by throwing the economy into a recession and the stock market into a bear market,' she said.
Not all investors share Wood's optimism. The Ark Innovation ETF has seen a net outflow of $2.13 billion over the past 12 months through April 24, according to ETF research firm VettaFi.
On April 22 and 23, Wood's Ark funds bought 418,938 shares of Iridium Communications () . That chunk of stock is valued at roughly $9.7 million.
The purchase was made as the satellite communications company's stock has dropped 20% in the past month.Iridium is a global satellite communications company based in McLean, Va. It operates the Iridium satellite constellation, a network of 66 active satellites providing mobile voice and data communications.
Its clients include governments and enterprises worldwide.
This week, Iridium reported rosy earnings per share of 27 cents, up 69% from last year. Revenues of $214.9 million increased by 5% and are ahead of estimates.
But Iridium's stock has been sliding, down 2.57% in the past 5 days as the S&P surged 4.59%. Year-to-date, the stock is down more than 20%.
Iridium CEO Matt Desch recently said the company is dealing with higher costs from tariffs, with only about a quarter of its equipment sold to U.S. customers.
"With new tariffs and U.S. trade policies still in flux, we expect to incur incremental equipment costs this year," said Iridium's CEO, Matt Desch.
Desch said tariffs could add about $3 million in costs this year, which Iridium plans to absorb without raising prices.
Investment firm William Blair upgraded Iridium stock to outperform from market perform following the earnings, saying the stock has more than 20% upside over the next year.
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The firm noted Iridium's strong free cash flow, even in a weak economy, and pointed to solid partnerships with the U.S. government.
Wood has been steadily building a position in Iridium since early February. The stock now ranks as the second-largest holding in the Ark Space Exploration & Innovation ETF () , making up 8.29% of the portfolio with 938,976 shares, according to stockanalysis.com.Sign in to access your portfolio
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